Samsung C&T Corp. (000830), the trading arm of Samsung Group, is close to an agreement to buy control of Parallel Petroleum Corp. from Apollo Global Management LLC for about $780 million, said two people with knowledge of the deal.
Samsung C&T will acquire a 90 percent stake in Parallel Petroleum while Korea National Oil Corp. will own the rest, the people said, asking not to be identified because the terms are private. An announcement may come as early as today, they said.
Rising prices of raw materials are spurring South Korean companies to boost investments in commodities ranging from oil and gas to copper, as they’re competing for supplies with China and India. Samsung C&T aims to boost revenue from its natural resources, energy and environment business to 46 percent of overall sales by 2015 from 31 percent in 2010, according to an investor relations presentation on its website.
In addition to changing Samsung C&T’s revenue mix, the purchase may also bolster the company’s construction business, said James Chong, an analyst at Tong Yang Investment Bank in Seoul. “Such investments would enable the company to participate more in infrastructure projects needed in the development of resources,” he said.
Samsung C&T fell 0.6 percent at 2 p.m. in Seoul trading, mirroring a decline in the benchmark Kospi index.
The deal would mark the biggest overseas takeover in the energy industry by a Korean company this year, data compiled by Bloomberg show. State-owned KNOC bought a 95 percent stake in Altius Holdings Inc. for $515 million in March. KNOC also agreed to buy a 24 percent holding in a Texas shale-oil block from Anadarko Petroleum Corp. for $1.55 billion this year.
Apollo, based in New York, aims to raise as much as $1.5 billion for a fund that will invest in natural resources and is touting its record running companies including Parallel Petroleum and Noranda Aluminum Holding Corp. to prospective backers, a person familiar with the matter said in July.
Samsung C&T said in September it won a 658.8 billion won ($578 million) order to build a power plant in the United Arab Emirates. Perth-based Metals X Ltd. last week said it is in talks with companies including Samsung C&T about funding and developing a nickel and cobalt project in Australia.
Samsung C&T declined to comment on the purchase in an e- mailed response to questions from Bloomberg News. Calls to Apollo’s New York offices outside of regular business hours went unanswered. Reuters reported earlier today that Samsung C&T is close to buying Parallel Petroleum.
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